A labour market reform was announced in 2022. A major part of it would be worked out in 2023. 2023 was therefore a year eagerly awaited. On 7 July 2023, Prime Minister Mark Rutte’s cabinet fell. With that, these plans were in jeopardy and Dutch citizens had to go to the polls for national elections. At the time of writing this article, no government has yet been formed, so it is not yet clear what will happen to the reform plans. Nevertheless, there are several developments in 2023 that are worth mentioning and there is certainly something to look forward to in 2024.

Qualification of employment contract

In March 2023, the Supreme Court ruled that Deliveroo’s riders were not self-employed but employees. The fact that Deliveroo’s riders were free to be substituted and that they were free to determine if and when they performed work did not make a difference. The Supreme Court held that whether an agreement qualifies as an employment contract depends on all the circumstances of the case. The Supreme Court lists a large number of circumstances, which may indicate the presence or absence of an employment contract, including whether the worker and/or the work itself is embedded in the organisation and whether the worker behaves or can behave as an entrepreneur. The Supreme Court also nuanced the importance of contractual clauses, such as the contractual possibility of being freely substituted by another person. The relevance of such clauses depends on their significance for the worker.

With the Deliveroo ruling, work will more quickly qualify as work under an employment contract. However, there are still many questions in practice, for instance on when characteristics of entrepreneurship tip the balance towards self-employment.

The government has submitted a bill for public consultation, codifying some of the Supreme Court’s ruling and some not. Given the initial comments, it is questionable whether the bill will come in that form.

For 2024, however, the following is important – the enforcement moratorium ends on 1 January 2025. The practice whereby the Tax Authorities only retrospectively claim tax for contracts that are wrongly not classified as employment contracts in cases of malice will thus come to an end. This is likely to prompt many contracting parties to reconsider their contractual relationship during 2024.

Flexible work approach

Besides tackling false self-employment, the government had set itself the goal of further restricting flexible forms of work, such as work in temporary contracts, on the basis of an temp agency contract or an on-call contract. Among other things, it is proposed to increase the interval between temporary contracts that count towards the application of the chain-of-contracts rule (which aims to ensure that a number of temporary contracts that succeed each other during a three-year period automatically result in a permanent contract) from six months to five years. It is also proposed to ban zero-hours and on-call contracts. In fact, however, on-call contracts will remain possible, with the proviso that a minimum contract size must have been agreed and the number of hours someone is called up extra may not exceed 30% of that minimum, unless the employee agrees. The aim is to give the flex worker more rights and also to encourage employers to give them a permanent contract. The latter seems a utopia as long as the government does nothing to make the permanent contract more attractive (eg, easing dismissal law, shortening the duration of the obligation to continue paying wages in case of illness (now two years)).

It is unclear whether this legislative initiative will actually become law in 2024.

Restriction on use of non-compete clause

The government has proposed to limit the use of non-competition clauses. Currently, for fixed-term contracts, the non-competition clause may only be agreed if the employer has substantial business or service interests provided that such interests are well-motivated in the employment contract. The proposal is that this rule will also apply to permanent contracts. In addition, the proposal includes limitations on the geographical scope and duration of the non-competition clause, while the employer will also have to pay compensation to the employee if he wants to enforce the clause after termination of the employment contract.

This proposal is not very controversial. The law is expected to be passed in 2024.

Registration of CO2 on travel movements

In 2023, the government decided that employers with 100 or more employees must register and report CO2 emissions from commuting and business travel movements, among other things. Initially, this obligation was to apply from 1 January 2024, but this has been postponed to 1 July 2024. The aim of the scheme is to steer towards reducing CO2 emissions.

Austerity of 30% tax rule

Under the 30% ruling, specific groups of foreign employees coming to work in the Netherlands can be exempted from taxes amounting to 30% of income. As of 1 January 2024, the scheme was scaled down to the extent that income above €233,000 will not qualify for exemption. Moreover, the House of Representatives adopted some amendments. Under these, the exemption percentage for new applications will gradually decrease from 30% to 10% of income over the five-year period (ie, the maximum duration of use of the scheme).

The Senate has now agreed with the amendments as adopted by the House of Representatives, such that the changes to the 30% tax rule have in fact entered into effect.

A labour market reform was announced in 2022. A major part of it would be worked out in 2023. 2023 was therefore a year eagerly awaited. On 7 July 2023, Prime Minister Mark Rutte’s cabinet fell. With that, these plans were in jeopardy and Dutch citizens had to go to the polls for national elections. At the time of writing this article, no government has yet been formed, so it is not yet clear what will happen to the reform plans. Nevertheless, there are several developments in 2023 that are worth mentioning and there is certainly something to look forward to in 2024.

Qualification of employment contract

In March 2023, the Supreme Court ruled that Deliveroo’s riders were not self-employed but employees. The fact that Deliveroo’s riders were free to be substituted and that they were free to determine if and when they performed work did not make a difference. The Supreme Court held that whether an agreement qualifies as an employment contract depends on all the circumstances of the case. The Supreme Court lists a large number of circumstances, which may indicate the presence or absence of an employment contract, including whether the worker and/or the work itself is embedded in the organisation and whether the worker behaves or can behave as an entrepreneur. The Supreme Court also nuanced the importance of contractual clauses, such as the contractual possibility of being freely substituted by another person. The relevance of such clauses depends on their significance for the worker.

With the Deliveroo ruling, work will more quickly qualify as work under an employment contract. However, there are still many questions in practice, for instance on when characteristics of entrepreneurship tip the balance towards self-employment.

The government has submitted a bill for public consultation, codifying some of the Supreme Court’s ruling and some not. Given the initial comments, it is questionable whether the bill will come in that form.

For 2024, however, the following is important – the enforcement moratorium ends on 1 January 2025. The practice whereby the Tax Authorities only retrospectively claim tax for contracts that are wrongly not classified as employment contracts in cases of malice will thus come to an end. This is likely to prompt many contracting parties to reconsider their contractual relationship during 2024.

Flexible work approach

Besides tackling false self-employment, the government had set itself the goal of further restricting flexible forms of work, such as work in temporary contracts, on the basis of an temp agency contract or an on-call contract. Among other things, it is proposed to increase the interval between temporary contracts that count towards the application of the chain-of-contracts rule (which aims to ensure that a number of temporary contracts that succeed each other during a three-year period automatically result in a permanent contract) from six months to five years. It is also proposed to ban zero-hours and on-call contracts. In fact, however, on-call contracts will remain possible, with the proviso that a minimum contract size must have been agreed and the number of hours someone is called up extra may not exceed 30% of that minimum, unless the employee agrees. The aim is to give the flex worker more rights and also to encourage employers to give them a permanent contract. The latter seems a utopia as long as the government does nothing to make the permanent contract more attractive (eg, easing dismissal law, shortening the duration of the obligation to continue paying wages in case of illness (now two years)).

It is unclear whether this legislative initiative will actually become law in 2024.

Restriction on use of non-compete clause

The government has proposed to limit the use of non-competition clauses. Currently, for fixed-term contracts, the non-competition clause may only be agreed if the employer has substantial business or service interests provided that such interests are well-motivated in the employment contract. The proposal is that this rule will also apply to permanent contracts. In addition, the proposal includes limitations on the geographical scope and duration of the non-competition clause, while the employer will also have to pay compensation to the employee if he wants to enforce the clause after termination of the employment contract.

This proposal is not very controversial. The law is expected to be passed in 2024.

Registration of CO2 on travel movements

In 2023, the government decided that employers with 100 or more employees must register and report CO2 emissions from commuting and business travel movements, among other things. Initially, this obligation was to apply from 1 January 2024, but this has been postponed to 1 July 2024. The aim of the scheme is to steer towards reducing CO2 emissions.

Austerity of 30% tax rule

Under the 30% ruling, specific groups of foreign employees coming to work in the Netherlands can be exempted from taxes amounting to 30% of income. As of 1 January 2024, the scheme was scaled down to the extent that income above €233,000 will not qualify for exemption. Moreover, the House of Representatives adopted some amendments. Under these, the exemption percentage for new applications will gradually decrease from 30% to 10% of income over the five-year period (ie, the maximum duration of use of the scheme).

The Senate has now agreed with the amendments as adopted by the House of Representatives, such that the changes to the 30% tax rule have in fact entered into effect.

This article was written for Lexology’s International Law Office newsletter.